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How Much Better Off Would I be in Work?

Universal Credit is designed to make you better off in work. To see how much better off you would be, look at the work allowance tables below.

This is the amount of extra money on top of Universal Credit you can earn each month without any deductions. After that limit is reached you still get to keep 45p in every pound (this is the ‘taper rate’, currently set at 55p in the pound).

If your Universal Credit award contains a Housing Costs element, your work allowance will be the lower work allowance in the table below. If it doesn’t, your work allowance will be the higher work allowance.

Sam is a single parent with two kids. Her monthly UC payments were £1,500 to cover everything including rent but she’s just got herself a job. Now she’s earning £1,200, so where does that leave her? On the old system, she’d keep her wages but have almost all deducted from her benefits. With UC, she can earn £335 (the lower work allowance) before her benefit is cut. So subtracting £335 from her £1,200 pay leaves £865. The taper rate of 55p in the pound is applied to this (55p x 865), coming to £475.75, which is then taken off her UC payment. (That is, £1,500 minus £475.75, leaving her with £1,024.25).

So Sam keeps all of her £1,200 salary, plus her amended UC of £1,024.25. By the end of the month, she’ll receive £2,224.25. She is £724.25 better off.

To check your personal situation, and whether you would be better off in work,  try this benefit and budgeting calculator for free by clicking here.

NB figures correct as of 27 October 2022. Amounts may have been revised.

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    • Hi Rae,

      In principle, Universal Credit was not designed to reduce how much benefit claimants are entitled to. It was only supposed to bring a bunch of benefits together and change how they are claimed, (ie, online). In fact, the opposite is true and it promised to ensure people are always better off in work – and it’s still true people who go into work will no longer have their earnings deducted from welfare pound for pound. However, experts are concerned that cuts to benefits are being snuck through in all the chaos surrounding UC but this is partly because it has taken so long to roll out and the government has an agenda to keep reforming welfare, cutting tax credits, for example.

      It isn’t possible for us to check your particular claim issues but you should talk to Citizens Advice, if you believe your payment is wrong. (One of the challenges with UC is that it promised to make claiming simple but merging six benefits just made it much harder to check the calculations are right.) As mentioned above, if you receive tax credits, your entitlement may have been changed. Don’t forget UC doesn’t cover all benefits, just six of them, so make sure you are still getting any of those others you received before moving over. And don’t forget to check if you are entitled to council tax support or reduction in from your local authority.

      Finally, we have heard that online calculations are not always totally correct and should be used only as a guide.

      Hope that helps and thanks for getting in touch we do appreciate the feedback.

    • Hi Rae,

      We continually update our Universal Credit Guide as new information from the government/DWP comes through.

      The figures above are taken from the 6th edition which was published just after the 2017 Autumn budget. It sounds like you may have an older edition as you’ll now find this information on page 31 of the Guide.

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